Rumors of Uber acquisition of Careem won’t go away, even when the Egyptian Competition Authorities warned them against any mergers. Bloomberg first reported in July that Uber was looking to merge with its fiercest Middle East rival. The company cited ‘three people familiar with the matter’.
An Uber spokesman declined to comment when asked to confirm or deny talks with Careem by TechCrunch. While a Careem spokeswoman, Maha Abouelenein, told them that they do not comment on rumors.
Yet, these rumors seem not to be going away. Yesterday, Bloomberg reported again that the two are in advance talks. Again, the company has cited close sources to the acquisition. Though, it has pointed out that the acquisition will be in the range of between $2 billion to $2.5 billion.
It seems Careem’s investors are not interested in the deal. But Bloomberg says that the ride-hailing’s “Careem’s management is working to convince the firm’s shareholders of the merits of a deal”. Adding that “no final decisions have been made, and the companies may decide against the transaction.”
The Uber-Careem merger could be as a result of a rivalry that is becoming costly with time. Yet, as a company that is looking to IPO in 2019, cutting costs and having a sign of turning a profit might be one of their priorities.
Uber has before cut deals as a way of exiting markets where competition had become fierce.
In March, the ride-hailing company retreated from South East Asia after it decided to sell its business in the region to competitor Grab. The sale price wasn’t disclosed, but as part of the deal, Uber got a 27.5 percent stake in the company.
In China, Uber decided to merge its China operation with its mainland ride-hailing rival Didi Chuxing in a $35 billion deal. Didi went on to invest $1 billion in Uber at a $68 billion valuation, while Uber China investors received a 20% stake in the rival company.
Similarly, in Russia, the company ceded the market to competitor Yandex. As part of the deal, Uber invested $225 million while Yandex contributed $100 million into a new joint company in which Yandex would own 59.3 percent.
Looking at the past exit deals or mergers Uber has done, it is unlikely that this one will be any different. Perhaps, Uber will decide to exit and invest in Careem. Given that the startup is also looking for funding after their recent $500 million Series E round as it continues to expand in MENA.